We want to make sure that you are aware that a standard personal auto insurance policy does not cover all rental car exposures. There's a gap between a renter's responsibility under the rental contract and what an auto policy will pay. If (as is most common), damage to the rental car is covered under the auto policy's physical damage section, the insured will certainly have to pay the deductible and at least a portion of the loss-of-use charge.
The Personal Auto Policy (PAP) covers the lesser of the "actual cash value" of the vehicle or the amount "necessary" to repair or replace the damaged property. The rental agreement may very well contractually obligate you to reimburse the rental company for the "full value" of the vehicle. The PAP also does not pay for any "betterment" (increased value of new parts replacing old ones) of the vehicle, nor any "diminution" of value (if the market value of the vehicle after repairs is less than that before the accident).
As implied above, there may very well be disagreement over the value of the vehicle or the amount charged for labor and materials to repair it. Your auto policy's Appraisal clause may be invoked with its accompanying costs. More importantly, the insurance company has the right to "...inspect and appraise the damaged property before its repair or disposal." However, the rental company, unlike you, is not contractually obligated to the insurer... it may choose to make the repairs immediately, potentially resulting in a lack of PAP coverage because of failure to comply with this contractual condition. In any case, purchase of the CDW usually allows the renter to "walk away" without the headaches involved in adjusting an auto claim.
The rental agreement may require immediate reimbursement for damages, and i is customary practice for the rental company to charge your credit card. This can create a significant debt, "max" out the card's credit limit (perhaps shortening a vacation or business trip), result in litigation, etc.
Rental agreements often make the renter responsible for any loss in value beyond normal wear and tear, regardless of the cause and regardless of fault. In order for your PAP to respond, you must insure at least one vehicle for both collision and other-than-collision (often called "comprehensive") coverage. If not, your policy will not respond to rental car damage and loss of use claims.
You will most likely be responsible for the rental company's loss of rental income on the damaged unit. Your policy has limited coverage for these charges.
The rental contract may make the insured liable for various "administrative" or loss-related expenses such as towing (e.g., one insured was charged for a 230-mile tow), appraisal, claims adjustment, storage, etc. Some of these expenses may not be covered by the PAP.
The PAP says that it is excess over: (1) any coverage provided by the owner of the auto, (2) any other applicable physical damage insurance, and (3) any other source of recovery applicable to the loss- travel policies, credit card coverage, etc. The potential controversy over who pays what is obvious and can result in litigation. In addition, keep in mind that many states have statutes, proprietary policy forms, and/or case law precedents that may govern this and other rental car exposures.
The PAP normally does not provide physical damage coverage for motorcycles, mopeds, motor homes, or other vehicles that are not private passenger autos, pickups, vans, or trailers. In addition, use of covered vehicles is limited to the U.S., its territories and possessions, Puerto Rico, and Canada (the rental agreement may also exclude operation outside a specific geographical area). The PAP will not cover vehicles that exceed the gross vehicle weight of 10,000 lbs. Most U-Haul type of vehicles would be over this limit and would therefore not be covered. If you rent a trailer (U-Haul, camper trailer, etc.), coverage is limited to $500.
The PAP may have limitations on use of vehicles that are not otherwise excluded by the rental agreement CDW or LDW. Also, the PAP may include an exclusionary endorsement for certain drivers or may apply only to designated individuals the CDW will probably also only apply to certain individuals, but operators for which no PAP coverage is available may be afforded protection under the rental agreement by adding them as designated drivers.
The PAP will most certainly include a deductible in the range of $100-$500 or more. In addition, payment for damage to a rental car may result in a significant premium increase (if not nonrenewal) via surcharges or loss of credits.
Although most CDW/LDW fees are considered outrageous, we advise you to purchase the CDW/LDW for short-term rentals. If anything, this will give you peace of mind while on vacation or business, and it could save you from a lot of inconvenience and lost time and money.